This Tuesday, the second Blu-Con conference was held in Beverly Hills, California. Blu-Con is entirely dedicated to the topic of Blu-ray and its potential future within the movie, hardware, software, gaming and retail industries. We jumped at the chance to attend, especially with all the underlying conversations about digital delivery versus Blu-ray adoption. We were very interested in hearing how the current state of the economy had altered the adoption rate of Blu-ray and what the industry experts expected to see in the coming months / years.

The conference kicked off with an opening from the DEG (Digitial Entertainment Group) president about what he expected to see this holiday season; namely $99 Blu-ray players and a higher attach rate of Blu-ray disc purchases. There are currently 12 million U.S. homes with Blu-ray players and title sales have already risen about 83% over the past quarter. He also discussed Blu-ray to DVD comparisons, specifically a 54% increase in Blu-ray hardware purchases over those how see a side by side comparison to DVD.

Mike Vitelli, Best Buy’s VP of consumer electronics, came up on the stage next to highlight what Best Buy has seen this year. With 65% of American households using at least one high definition television, Vitelli predicts that Blu-ray hardware owners are going to climb to 20 million homes by the end of the shopping season. He also predicted that number will double to 40 million by the end of 2010. Vitelli also stressed the need for further education of Blu-ray technology.

68% of Best Buy customers were still unfamiliar with Blu-ray. Additionally, customers are continually confused about the content, device compatibility and digital connectivity. According to Vitelli, if Blu-ray will follow the same sharp increase that VHS and DVD saw after the first 5 years of their existence, Blu-ray education needs to ramp up considerably.

The next panel brought up several heavy hitters, the studio presidents of Fox, Sony, Universal and Warner. These guys were surprisingly jovial, despite the lagging Blu-ray sales for the year. The group agreed that the decline in DVD sales was somewhat irreversible, due to the current state of the economy, increase of other options in the marketplace and saturation of DVD adopters. They also attributed the convenience of rental options to the drop in DVD sales. Interestingly, there have been more digital copies from Blu-ray discs that offer that option than overall digital delivery sales.

They also lamented about the problems with cable delivery of their movies. They attributed the limited adoption of that technology to a poor user interface across the majority of cable companies and that most consumers aren’t looking in that section of the menu until all other options have been exhausted. They continued to weigh in on Blu-ray, highlighting a 10% penetration in the market to ramp into mass adoption. Currently the conversion rates is the highest on Blu-ray action adventure titles and the panel all agreed that Blu-ray 3D won’t be ready for the marketplace until late 2010. When asked about digital delivery, the panel was cautiously quiet. They did mention the possibility of digital kiosks (similar to Red Box units) that would load a digital version of the movie on your portable device.

After the studio heads wrapped up, the live interview of Martin Scorsase was set to begin. Scorsase was there to highlight what he thought of Blu-ray as well as how he progressed as a movie collector throughout his lifetime. He mentioned collecting movie posters before any collectible movie formats even existed. He recalled the confusion on aspect ratios when DVD came out and how it changed the home movie watchers experience from VHS.

He sees Blu-ray as the most effective replication of the actual movie experience, due to the resolution of the discs and the availability of uncompressed audio tracks. He mentioned that his favorite Blu-ray disc was The Searchers and that, when making a movie, he ponders how the special features on the disc will influence budding filmmakers. According to him, the way the supplements are presented should direct avid filmmakers into learning about different styles of film. He was also very tickled that his 10 year old daughter couldn’t tell the difference between a 50 year old film and a recent one due to the resolution of Blu-ray and the remastering of old film transfers.

The Director of Marketing for Sony’s Playstation division got up to do a guarded presentation on the Playstation 3. I got the feeling that the room was less than excited that a gaming machine made up 60% of the standalone Blu-ray player market, likely due to a low attach rate of Blu-ray movies at purchase. He mentioned that there were 9 million players in the U.S. alone and 27 million worldwide. After the recent price cut to $299, they have seen an increase in sales; significantly from Xbox 360 / Wii owners. The current advertising campaign is attempting to broaden the Playstation 3’s reach and expand beyond the 25 to 34 year old demo. With an interesting tie in, the December release of District 9 is going to include a demo of God of War 3. I got the feeling that he was angling for more studios to partner with on these game tie-ins.

After a fantastic lunch (and a drawing for five Playstation 3 Slims that we didn’t win), we launched into the BD-Live panel. The panel was made up of 4 studio VP’s and Ty Roberts, the CTO of Gracenote. Gracenote is the service behind iTunes, basically providing all the album information for iTunes. The studio VP’s got their chance to shill their early attempts at BD-Live integration and well as a couple upcoming features. Being able to send recipes to a friend via the upcoming Julie & Julia Blu-ray was interesting as well as Lost University, a learning center for all things Lost on the upcoming season 5 Blu-ray release.

The brilliant mind on the panel was easily Ty Roberts (and it was moving about 100 miles an hour). His insight into the future of BD-Live was inspiring and filled with potential. He was launching into hypothetical scenarios like users recreating movie scenes and inserting them into the movie. The same went for custom soundtracks or recording voice overs via the iPhone to insert them into the movie. He also mentioned Gracenote’s work in cataloguing all information on Blu-ray discs and being able to pull up that information in a 400-disc Blu-ray changer before even spinning around to the correct disc. His outlook for BD-Live was very realistic based on his experience with Apple; reaching true market saturation in about 5 years.

All in all, Blu-Con offered a large amount of insight into the future of Blu-ray discs / hardware. Everyone seemed fairly positive in the long term adoption, but cautiously optimistic in the growth over the next year. Interestingly, digital delivery wasn't discussed as in-depth as we would have hoped; but there seems to be room in the marketplace for both formats.